To Create A More Sustainable System Of Property Insurance For Public Schools, Institutions Of Higher Education, And State-owned Property; And To Declare An Emergency.
HB1821 restructures Arkansas’s public-property insurance framework by creating a new State Captive Insurance Program to cover property owned by public schools, state-supported institutions of higher education, and state-owned property. The bill transfers existing school and state property insurance functions into the Department of Transformation and Shared Services, establishes an Office of Property Risk, and authorizes the state to form and maintain a captive insurance company to provide coverage. It also creates a new trust fund for the program, sets reserve-balance requirements, requires annual reporting and legislative oversight, and makes participation mandatory for public schools and state agencies that accept state appropriations for facilities.
The bill revises multiple statutes governing school insurance, the Arkansas Multi-Agency Insurance Trust Fund, and captive insurance law to align them with the new program. It changes the role of the State Insurance Department and the Commission for Arkansas Public School Academic Facilities and Transportation, requires school districts to comply with new insurance and facilities-planning rules, repeals certain obsolete provisions, and exempts the new captive insurer from some existing premium-tax and surplus-lines provisions. It also prohibits public adjusting for claims under the program and sets procedures for handling outstanding claims during the transition.
HB1821 would significantly alter Arkansas law by consolidating several public-sector property insurance programs into a single captive insurance structure administered through the Department of Transformation and Shared Services. It amends provisions in Titles 6, 10, 19, 23, and 25 of the Arkansas Code, creates the State Captive Insurance Program Act, establishes the State Captive Insurance Program Trust Fund, and authorizes the state to create a captive insurance company to insure public schools, higher education institutions, and state-owned property. The bill also changes oversight, reporting, valuation, claims, and funding rules for affected entities and directs a phased transfer of authority, records, funds, and personnel from existing programs to the new system.
The bill appears to have broad legislative support. It passed the House 89-5 and the Senate 32-0, indicating strong bipartisan approval and little recorded opposition in floor votes. The bill’s findings and emergency clause reflect a sense of urgency about rising property insurance costs and market instability affecting schools and state property, suggesting the measure was viewed as a necessary structural response rather than a routine policy change.
The main points of contention identified in the bill itself are the use of public adjusting, the valuation of higher-education properties, and the mandatory nature of participation in the new program. The General Assembly specifically states that public adjusting by some schools has increased premiums and reduced market options, and the bill therefore prohibits public adjusters for insured entities in the captive program. It also notes that higher-education properties have been historically undervalued and will need reappraisal, which implies potential disputes over coverage amounts and asset valuation. More broadly, the shift of authority away from existing insurance structures and into a new captive insurer could raise concerns about implementation, transition timing, and reserve adequacy, though no committee transcript reflects direct opposition.